CATL beat expectations again in 1Q26, and JPMorgan upgraded H-shares to OW while raising the target price
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CATL beat expectations again in 1Q26, and JPMorgan upgraded H-shares to OW while raising the target price
The report believes CATL's technology, scale, and global scarcity in EV and ESS batteries continue to support earnings resilience and a valuation premium, with short-term focus on the April 21 Super Tech Day catalyst.
- 1Q26 combined EV and ESS shipments exceeded 200 GWh, with ESS accounting for about 25%, and EV shipments up nearly 50% year-over-year, while ESS was up about 130% year-over-year.
- JPMorgan raised FY26/FY27 earnings estimates by 6%/8%, lifted CATL-A target price to RMB520, and CATL-H target price to HK$725.
- Management said production scheduling was strong in April and May, with capacity utilization maintained at 85–90% and a strong orderbook.
- The report believes CATL-H can command a reasonable 15–25% premium versus CATL-A, citing global investor preference, H-share scarcity, liquidity structure, and index weight differences.
Report interpretation
Overview
This is a JPMorgan report on CATL's earnings review and rating adjustment. The report states that after CATL delivered strong FY25 results, 1Q26 again exceeded expectations, with management's conference call conveying positive demand, stable margins, and strong production scheduling. The report upgrades CATL-H to Overweight and raises target prices for both CATL-A and CATL-H to RMB520 and HK$725, respectively.
Core views
Core views include: first, EV and ESS demand remains strong, with 1Q26 combined shipments above 200 GWh, rising share from ESS, and AI data center-related storage demand potentially providing long-term incremental growth; second, although higher lithium and commodity prices create cost pressure, scale effects, product design, cost pass-through mechanisms, and supply chain integration help stabilize unit profitability; third, CATL-H can reasonably trade at a 15–25% premium to CATL-A due to global investor demand, H-share scarcity, and leadership in the industry; fourth, the company remains JPMorgan's preferred name in the Chinese battery space.
Analysis framework
The report analyses revised earnings, management call minutes, A/H valuation gap comparison, global and China EV battery share trends, ESS demand outlook, and raw material price changes, and references TSMC ADR vs Taiwan and CMB H/A valuation differentials as comps for CATL-H premium.
Methodology notes
Use TSMC ADR/TW and CMB H/A premium comparisons to justify the reasonable valuation gap between CATL-H and CATL-A.
The report argues that CATL's scarcity in the global EV and ESS value chain is closer to the TSMC ADR case, so H-share premium should be higher than that of ordinary dual-listed A/H companies.
Raise FY26/FY27 earnings forecasts based on stronger shipment growth, ESS demand, and improving EV mix.
CATL-A target is based on 25x FY26E P/E, and the report raised FY26/FY27 earnings estimates by 6%/8%.
Assess long-term growth through EV penetration, battery energy per vehicle, storage policy, data center electricity demand, and overseas market share.
Management expects EV and ESS demand in the industry to exceed 4 TWh by 2030, with CAGR above 25–30% over the next few years.
Asset mapping & comparison
Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).
- CATL-A 300750.SZ / 300750 CHCore covered name, Overweight maintained
- Strengths
- Technology leadership, high global EV and ESS market share, strong unit profitability resilience, and relatively good A-share liquidity.
- Weaknesses
- Lacks the global-scarcity premium that H-shares can carry, and A-share investors more frequently compare it with domestic peers.
- Comparison
- Target price RMB520, current price RMB431.00; the report believes H-shares can enjoy a 15–25% premium versus A-shares.
- Risks
- Shipments or margins below expectations, and U.S.-China geopolitical risk.
- CATL-H 3750.HK / 3750 HKRating upgraded from Neutral to Overweight
- Strengths
- Limited H-share supply, stronger global investor preference, and exposure to global EV and ESS chain scarcity.
- Weaknesses
- Lower liquidity than A-shares and potential minor dilution from potential H-share placements.
- Comparison
- Target price HK$725, current price HK$655.50; the report views a fair A/H premium range at 15–25%.
- Risks
- Potential placements, shipments or margins below expectations, and geopolitical risk.
Key data
- 1Q26 total shipments>200GWhEV and ESS combined; ESS around 25%.
- 1Q26 EV shipment growthnearly 50% y/yStill achieved strong growth despite weak Chinese Q1 NEV market conditions.
- 1Q26 ESS shipment growthabout 130% y/yStorage demand became an important growth driver.
- 1Q26 gross margin25%Remained relatively stable despite rising raw materials.
- Capacity utilization85–90%Management said production scheduling remained strong in April and May and order intake was full.
- CATL-H target priceHK$725Raised from HK$650 and upgraded from Neutral to Overweight.
- CATL-A target priceRMB520Raised from RMB500, Overweight maintained.
- FY26/FY27 earnings revisions+6% / +8%Reflects stronger ESS demand and higher EV battery market share.
- CATL global EV market share39% in 2025, up to 42% in 2M26According to SNE Research methodology.
- Europe EV market share43% in 2025Up markedly from 37% in 2024.
- ESS market share30% in 2025Flat versus 2024.
- Overseas revenue shareabout one-thirdAround one-third in FY25, similar ratio in 1Q26.
Impact & implications
The investment implication is constructive: strengthened demand, share, and earnings resilience reinforce CATL's certainty as a global battery leader, while H-share scarcity and global investor preference provide additional valuation support. Near-term catalysts include the April 21 Super Tech Day, FY26 earnings upgrades after 1Q26 results, sustained elevated production, and an enhanced ESS and AI data center storage narrative.
Risks
- Shipments below expectations.
- Gross margin or unit profitability below expectations.
- U.S.-China geopolitical risk affecting overseas operations or valuation.
- Raw material inflation exceeding the pass-through capacity of cost-pass mechanisms.
- Potential H-share placement, if executed, may cause dilution, though the report estimates less than 2%.
- Higher overseas plant costs relative to China if productivity gains do not materialize, potentially hurting margins.
What to watch
- New technology, products, and ecosystem disclosures from the Super Tech Day on April 21.
- Continuation of production scheduling, capacity utilization, and order flows in April and May.
- ESS demand, especially incremental storage from AI data center and AIDC use cases.
- Whether CATL-H premium versus CATL-A reverts to or stays within the fair 15–25% range.
- Trends in lithium, sulfuric acid, and other key material prices and cost pass-through.
- Progress on the Hungarian plant ramp and overseas cost improvements.
- Demand changes driven by recovery in the Chinese EV market, policy stimulus, and new models at auto shows.